Exclusive: Major National Citizen Service provider goes bust

It has emerged that Engage4Life Limited - one of 10 main providers awarded regional contracts worth close to £1bn to deliver the NCS between 2015 and 2018 - went into liquidation 14 months ago.

Papers filed at the time show that Engage4Life (E4L) went into liquidation with debts of more than £500,000, including around £400,000 owed to nine local NCS providers.

A progress report by the official liquidator, filed last week, reveals that the NCS Trust, which runs the NCS on behalf of the government, is also now claiming it is owed £780,000.

The report reveals that the director of E4L, Gareth Holohan, received a total of £710,000 in dividends around three months before E4L went bust. The money was paid into his director's loan account eliminating a debt of £369,000 that he already owed to the company. Over the subsequent three months he made three payments from the account to himself totalling £329,000.

The liquidator has begun proceedings against Holohan to recover the £710,000 in dividends but adds that Holohan is "defending the claim vigorously", and a court case is due to take place later this year.

Meanwhile, the liquidator's report shows that NCS Trust is being pursued for £196,000 that it is claimed to owe E4L. The NCS Trust itself has stepped in to act as the regional provider in South West England in the wake of the collapse.

In a statement NCS Trust said it ended its contract with E4L in 2015. CYP Now has been unable to contact Holohan.

Prior to 2015, E4L was a relatively small-scale local provider of the NCS in three areas of the West Midlands region - Herefordshire, Telford & Wrekin and Worcestershire.

In October 2014, it was awarded one of the main contracts for the NCS for the period January 2015 to October 2018 in the "South West 2" region of England covering the areas of Cornwall, Devon and Dorset, Bath and North East Somerset, Swindon and Wiltshire. In total, the 2015 to 2018 contracts across all 19 english regions are worth around £960m.

The South West 2 contract was previously held by Petroc College for 2013 and 2014. Petroc won the contract to deliver NCS in another region for 2015-18.

Until now, no details of the collapse of the firm have been made public, although youth minister Rob Wilson last month confirmed in parliament that nine, rather than the original 10, providers currently have contracts to deliver the NCS.

The revelations come at a time when the NCS Trust's governance arrangements are under the spotlight. Earlier this month, concerns were raised about the transparency of the NCS Trust by the public accounts committee,which has been conducting an inquiry into the governance and finances of the NCS.

The committee is due to publish its findings tomorrow. During the evidence sessions, committee chair Meg Hillier questioned why the NCS Trust was not more open, describing its annual report and accounts as "remarkably untransparent".

The government is currently taking action to ensure that problems with providers are properly dealt with.

Speaking during a public bill committee in January, youth minister Rob Wilson said provisions have been placed in the National Citizen Service Bill currently going through parliament, requiring that the NCS Trust inform government promptly if any NCS provider falls into serious financial difficulty, or is in breach of contract with serious consequences for the trust.

"The trust sits in the middle of a huge operation, and the government need to know of serious issues that could have either financial or reputational consequences for NCS," he said.

A statement issued by NCS Trust said: "When awarding contracts, the NCS Trust fully complies with EU procurement regulations and carries out extremely detailed and robust checks on all of its partners. NCS Trust ended our contract with E4L in 2015.